No. 81-512 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982

INTERMOUNTAIN TELEPHONEAND POWER COMPANY Petitioner and Appellant,

DEPARTMENT OF PUBLIC SERVICE REGULATION, MONTANA PUBLIC SERVICE COMMISSION, Respondent and Respondent.

.1from: DistrictCourt of the ThirteenthJudicial District, In and for the County of Yellowstone Honorable Robert Wilson, Judgepresiding. Counsel of Record: For Appellant: Peterson, Schofield & Leckie, Billinqs,Montana Kenneth D. Peterson argued, Billings,Montana For Respondent: Calvin 

### K. Simshaw argued, Helena,Montana Crowley Law Firm,Billings,Montana

Submitted: September 10, 1982 Decided: October 7, 1982Mr. Frank 5. Morrison, Jr., delivered the Opinion of the Court.

On April 2, 1980, the Public Service Commission (PSC) conducted a public hearing in Custer,Montana, concerning the quality of telephone servicebeing provided to the area by Intermountain Telephone and Power Company (Intermountain). The PSC issued a final order October 27, 1980, stating that the servicewas not "reasonably adequate." Intermountain petitioned the District Court of the Thirteenth Judicial District for judicial review of that order. The District Court affirmed the order of the PSCAugust 12, 1981, and issued a final judgment to that effect September 15, 1981. Intermountainnow appeals that judgment. The District Court issued a stay of its judgmentpending this appeal. For a number of years, the PSC received complaints from the Custer area residents concerning the poor quality of telephone serviceprovided by Intermountain. These complaints

were communicatedby PSC to Intermountain'smanagement. Service did not improve. The complaints continued. The PSC began a formal investigation, resulting in a public hearing in Custer onApril 2, 1980. More than twenty Custer residents testified, along with Norman ??ills,Intermountain's spokesman and a representative of Mountain Bell. Testimony by the residents indicated that there were

numerous problems with the telephone service. ~scertaining whether a phone worked or notwas described as similar to playing Russian roulette. The weather affected the clarity of the connection. Incoming calls often did not ring. Wrong connections occurred. Long-distance servicewas sometimes non-existent for extended periods of time. ~elephonelineswere draped over posts and on the ground in several instances. Repairs often took several days as therewas no resident repairman in Custer. In respcnse, Norman Mills, owner of Intermountain, 

### -- testified that fifty-seven miles 

### of long-distancewire was the responsibility of Mountain Bell, not Intermountain and that Mountain Bell failed to relaymessages concerning telephone problems until several days after they were received. His personal efforts, and those of Bell operators, to duplicate the problem of incoming calls not ringing through to subscribers,

were unsuccessful. Some telephonewire was in need of replacement; however, no funds existed with which to replace it. The switchboardhad been updated and was now capable of handling one hundred more calls than before. Further improvements would have to await more funds. He was nonconnittal

on the desire of the Custer residents to have a full-time serviceman located in Custer. Mountain Bell representatives acknowledged joint responsibility for the fifty-seven miles of long-distance telephonewire. They testified thatpropositions to replace thewire had been conveyed to Intermountain,but that Intermountain refused to contribute its share of money to finance the repairs. Following the hearing and prior to issuing its order, the PSC sent an engineer to Custer to test the phones. In his report, the engineer stated he "droveto the last subscriber's house onmost of the rural lines and found the quality to be normal, and got a dial tone immediately and talked to the operator in Billings." Individuals reported to him that although their phone service was presently okay, it had been inadequate in the past. Two phone lineswhichwere "bad"were being repaired that day. Phone wires lying on the ground were being replaced by underground cable. The inside of the exchange was "not as neat as I have normally seen elsewhere; however, with further installations and rewiring in progress and in evidence, I would wish to inspect the premises at a later date after all reconstruction is complete." On the basis of the above-discussed facts, the PSC issued its final order, which the District Court affirmed. In its appeal, Intermountainpresents the following issues for review: (1) Whether the order of the PSC was issued within the authority of the PSC? (2) Whether the order was supported by the evidence on the record? Section 69-3-102,MCA, gives the PSC supervision over and regulation of public utilities. Section 69-3-201,MCA, mandates that every public utility provide "reasonably adequate service and facilities." If the PSC is to supervise utilities adequately, itmust be able to ascertain whether or not a utility isproviding "reasonably adequate service." Therefore, the PSCwas within its authority when it issued the October 27, 1980, order stating that Intermountain

was not providing "reasonably adequate service." Twenty area residents testified regarding the poor quality of telephone serviceprovided to them. One PSC engineer testified that he found good telephone service to exist the one day he was in the area. Clearly, the findings of the PSC regarding the quality of telephone servicewere supported by substantial credible evidence, as required by section 2-4-704(2)(e)

### ,MCA.Plontanahas no statuteproviding for the licensing, franchisingor certifying of telephone companieswherein those companies are granted an exclusive right to serve a certain area. There is also no exclusiveproperty right under the Territorial IntegrityAct of 1971, as that Act applies to suppliers of electrical service, not telephone service. Section 69-5-103,MCA. Telephone service competition is basically free and open in Montana, except so far as telephone cooperatives are concerned. Section 35-18-105(2),MCA, prohibits telephone cooperatives from duplicating "reasonably adequate service" already in existence. But, if no "reasonably adequate service" isbeing provided, telephone cooperativesmay provide service to that area. The language in the order of the PSC stating "there exists no provision of Montana law thatwould prohibit another telephone company,whether private or cooperative, from providing telephone service to residents of the Custer area,

# . ."ismerely dictum. Private telephone companies are free to compete at any time. Telephone cooperativesmay competewhen no "reasonablyadequate service" is available. The order of the PSC is affirmed. *

We Concur:

-- Chief JusticeJustice Daniel J. Shea did not participate in this decision.